The yield on China’s 1-year Treasury bond, identified as CN240021, has dropped below 1% for the first time since May 2009. The last time this happened was when Lehman Brothers filed for bankruptcy. This sharp decline in the bond yield suggests that investors believe the Chinese government is likely to implement significant monetary stimulus or even quantitative easing (QE) to boost the economy.
The 10-year bond yields fell to 1.74%, down by 0.03 percentage points, after surpassing 2% earlier this month. This decline follows China’s central bank’s decision to keep one-year and five-year loan rates unchanged, which has sparked expectations for further rate cuts in 2025.
The PBoC’s key tool, the seven-day reverse repo rate, is at 1.5%. Additionally, weak November retail sales and a larger-than-expected drop in imports have raised concerns about sluggish domestic demand, contributing to the bond-buying frenzy.
